Mena posts Dh117B M&A deals in H1 2017

Dubai - Oil and gas tops with value reaching Dh42.2 billion

Mergers and acquisitions activity in the Middle East and North Africa in the first half recorded a deal value of $31.9 billion (Dh117 billion), of which Dubai Aerospace Enterprise's (DAE) acquisition deal accounted for nearly a quarter.
DAE's $7.5 billion (Dh27.5 billion) acquisition of Awas Aviation Capital was the largest deal announced during the first half. Of the 192 deals in the Mena region in the first half, the top 10 contributed over 76 per cent to the total deal value registered in the first half of 2017.
Oil and gas was the top-performing sector by deal value reaching $11.5 billion (Dh42.2 billion). The airline industry followed with $ 7.5 billion, power and utilities deals with a total deal value of $3 billion, and the chemicals sector with deals amounting to $2.2 billion in value. The banking and capital markets industry, which accounted for $1.9 billion in deal value, was the fifth-highest performing M&A sector in the first half.
The number of deals and their value in the first half represented a decline of 23 per cent and 17 per cent respectively compared to the same 2016 period. Announced deal value also dropped to $31.9 billion, down from $38.9 billion in the same period of 2016. Out of the total deals, outbound deals accounted for the highest deal value reaching a total of $19.6 billion from 61 deals. Domestic deals generated the highest amount of activity in the first half of the year with a volume of 93 deals and value of $5 billion. Inbound M&A activity reached a volume of 38 deals with a value of $7.3 billion.
Phil Gandier, Mena transaction advisory services leader at EY, said in the first half, 61 per cent of the acquisition capital was allocated outside Mena, making the region a net exporter of capital. "We expect this trend to continue for the remainder of the year as investors continue to see more value and lower risk in non-Mena markets."
Anil Menon, Mena M&A and equity capital markets leader, said there is significant deal activity in retail and consumer products as well as oil and gas, and a secular shift in capital allocation to the e-commerce and tech sectors in the Mena. "The market is loading up for a spate of deal announcements soon after summer."
The average deal value of inbound deals rose by 36 per cent and outbound value by 123 per cent in the first half when compared with the same 2016 period. On the contrary, the average deal value of domestic deals witnessed a significant decrease of 74 per cent in the first half of 2017 when compared to the first half of 2016.
The second quarter of 2017 experienced an overall decline in the volume and value of deals when compared to second quarter of 2016. Announced deal values in the quarter reached 80 deals with a value of $12.7 billion, a drop from the 135 deals reaching $20.1 billion announced in the same 2016 quarter.
- issacjohn@khaleejtimes.com